Question

If for instance there is vendor A who lends his buses on hire on monthly contract basis to vendor B who in turn gives on hire to school. In this cases since vendor B is exempt from GST , how will we treat vendor A ? Is vendor A also exempt or he is liable for GST?

Answer

Exemption on services under GST is provided through Notification No. 12/2017 Central Tax (Rate).

Vide s.no. 22 the following service is exempted:

Services by way of giving on hire '

(a) to a state transport undertaking, a motor vehicle meant to carry more than twelve passengers; or

(b) to a goods transport agency, a means of transportation of goods.

(c) motor vehicle for transport of students, faculty and staff, to a person providing services of transportation of students, faculty and staff to an educational institution providing services by way of pre-school education and education upto higher secondary school or equivalent.

In view of above said notification if B is providing transport service to school then A is exempt as he is providing motor vehicle on hire to B who is providing transport service to school.

However A is liable to GST if B is not providing transport service to Educational institution rather he is giving bus on hire to some other person. (School) (Reply dt.07/08/2018)